What is a Short Sale?
A short sale occurs when the lender accepts less then what is owed on the mortgage as a “short payoff”
In the past few years, with the decline of real estate values, more and more homeowners find themselves owing more than what their properties are worth. In both Miami-Dade and Broward Counties, many homeowners could not pay their mortgage or were being forced to relocate due to work related circumstances causing foreclosures to skyrocket.
For many reasons, “short sales” have become more and more popular with lenders and consumers as an alternative to the costly and time-consuming foreclosure process.
Why would a homeowner choose a short sale?
Many of our clients attempt a short sale as a final loss mitigation option, once they have exhausted all possible options to keep their property. The primary reason to attempt a short sale is to avoid the lasting and damaging effects that foreclosure has on the homeowner’s credit.
In Florida, the lender has the right to sue the homeowner for the deficiency balance, which in many cases forces the homeowner into bankruptcy.
A homeowner who opts to do a short sale, as opposed to allowing their property to be sold at foreclosure sale, is essentially helping the lender recover as much of the lenders money as possible by the selling the property for current market value. At Hershey Law Firm, P.A. we will negotiate for a “deficiency waiver” so that the lender will forgive the remaining debt.
Example: Homeowner owes $150,000 on their mortgage. The current market value of the property is $100,000. If the bank accepts an offer for $100,000 then the Hershey Law Firm, P.A. will negotiate with the lender requesting a “waiver of deficiency” to waive the remaining balance of $50,000.
A short sale benefits everyone involved
- Homeowner: Allows you to avoid foreclosure and ultimately save your credit score.
- Buyer: Can purchase a desired home at a very competitive price.
- Lender: Most banks and lenders prefer to have the money from a short sale then deal with the expenses and hassles of a foreclosure.
Lender Approval for Short Sale
There are no universal set of rules or regulations that determine whether you are eligible for a short sale or whether your lender will approve a short sale. Each lender is unique in that they have their own criteria that a homeowner must meet.
Qualifications for a Short Sale
If you answer yes to any of the following questions then you may be able to qualify for a short sale on your property.
- Are you behind on your mortgage payments, in default, or has a foreclosure case been filed against you?
- Have you recently experienced financial hardship? Divorce, loss of job, relocation, increased expenses, etc. are all considered financial hardships.
- Do you owe more on your home than it is worth?
- Are you currently in an adjustable mortgage that has increased so much that it takes up most of your monthly income?
At The Hershey Law Firm P.A., we assist clients throughout the entire process of negotiating short sales. We compile a complete short sale package where we collect and evaluate financial information, information about your house, and information needed for the sale itself (short sale contract, disclosures, addendums).
The firm’s founding attorney, Staci M. Hershey, Esq. is a licensed Florida realtor. If you need to list your house for a short sale, we can take care of that right here in the office. We’re here to look out for your needs and your best interests during this time. We can help you transition to a better financial outlook.